>> this week on "political capital," we look back at the year that was. we debate who had the best and worst 2013. we begin the program with the author of "from left to right: my journey from liberal to conservative," michael novak.

was there any compelling catalyst? in other words, were there transcending --? >> one by one the beliefs i held earlier did not seem to work so well. then give you an incident from the war on poverty which i was very much for. i never would have predicted that in 10 years that crime rates would mushroom. that families would start breaking up. in a short compass, looking back on it, with the study group 20 years later, we need to worry about the condition of the elderly. it is so much better. they look younger, do more things.

with the young, it is devastating because of the family breakups and the non-formation family. >> you are talking about issues that remain prominent. you are one of the most prominent catholic people in america. religion is central to your being and central to your book. >> i am very enthusiastic. i was not at first. i was hands-off in the beginning. i was a little suspicious of the populist touch until i saw what it was going to do, how serious it was. what he has done is amazing. he has concentrated on the basics -- love, care for the poor, humility, kindnessess --those are what matter, really. >> do you think he is naïve about capitalism and economics?

>> i had to look at john paul ii from a bullish direction. it was a learning curve for him. when i think of experiences in argentina and other places in latin america, what he says is true. there is almost no movement for the poor. there is not the upward mobility that my family experienced, that most americans that come out of poor beginnings. that does not happen it argentina. >> why have so many conservatives in america so harsh about him or so skeptical or worried? >> some of it has to do with what he had to do about economics.

that was the weakest part of his address and he seemed surprised by that. bishops are not trained to do economic analysis. he kept saying that is not what i was doing. it is not extemporized them, but i wish he did not say something to simple things he said. the main thing is that he has his focus right. the main job for christians today in the next 20 years, the underlying job is raise the mass of people out of poverty. we have made tremendous progress over the last 20 years, over one billion. we have our work cut out for us. >> i'm going to get to that in a minute. just to stay on the pope of for a second, do you think his economic theories will change or evolve? you think you'll be less critical of capitalism as he goes through this progress? >> i think he will.

there is a skepticism throughout the latin world, which i experienced when i went to rome to study years and years ago. they write us off as individualists. i don't think we are. i think americans work together -- the only time i am alone is when i'm on an airplane. i answer the first couple of questions -- i teach. what do you teach? the humanities. that is it. i am home free. some conservatives have been apoplectic about other issues. for instance, some of the appointments the pope has made. he removed cardinal burke, a hero to some of america. should conservatives be upset as some seem to be? >> no, you have to keep your eye on the basics.

he understands an inner spirit of catholicism that has been growing and building. the wonderful saint at the end of the last century died in 1897. that was her whole message. the basic thing is god is love. he loves us despite our constant faults. that is what we've got -- >> so this is an overreaction from the limbaugh's of the world? >> rush does not understand the catholic part of it and he is taking it seriously. i don't blame him for criticizing. when you see something to criticize, go ahead. give the guy a chance to get his feet on the ground, to get his arms around the question of globalization. get his arms around the fact that capitalism is mostly ideas.

practically everything we enjoy in the united states is an idea. >> i want to go back to what you said about the latin states and the upward mobility you experience. that is no longer as true in america as it once was. even canada and western european countries now have more social mobility. 70% of people born poor in this country never make it to middle-class. should government do something about that? >> government has ruined it. that is what i've come to think, that the poverty programs, ironically, they have the wrong incentives. for the first time in our history we have a body of people who are generations on welfare.

>> we have had a lot of conservative policies in effect the last 30 years and the social mobility is worse today than it was 30 years ago. >> well, i think under reagan it really -- one thing i notice, it immigrants jump ahead really quickly. we constantly receive a stream of poor people in here. look, my family got here as immigrants. i am grateful for that. >> he became the prime joy of georgetown, pennsylvania. >> a lot of people did. >> michael novak, thank you for being with us. it fascinating book. happy new year to you. >> when we returned, the biggest foreign policy of 2013. ♪

>> welcome back. a huge year in 2013 for foreign policy. bloomberg news reporters join us now with more on those. what was the biggest foreign-policy story last year? >> no question, iran. that was the big surprise. we had the election that brought president rouhani to power.

it ended in the first ever nuclear interim deal with iran for the first time in 10 years that that has been going on. >> a year ago, was there any crisis or story we would have anticipated that did not happen? i think you are right about iran. >> if we are talking about the dog that did not arc it was u.s. involvement in syria. president obama had set his red line. he did it in 2012. he said that if chemical weapons are used it cannot the allowed to stand. it did happen and it may have happened more times before august of this year. they proved it with the august attack and obama walked up to the edge of the precipice, made it seem as if he was going to

strike as punishment for that attack and at the last minute he pulled back. he said he would put it to congress and we all know what happened with secretary kerry making what was called at the time a gaffe, saying that what's eerie could do to stop u.s. strike is to give up all of its chemical weapons in a week but we know it would never happen. the russians got that and we had a chemical weapons deal and no u.s. strike. >> obama did not have a good year. the secretary of state did. >> he has had a surprising first year. he was considered the fallback. susan rice is not confirmed because of her comments about benghazi. they thought he was going to be a windy politician going around doing things the same old way.

what he has done in part because president obama is in his second term and he is willing to take foreign policy risk, and because kerry has turned out to be a high risk-high reward guy. let's not forget who the predecessor is. hillary clinton wanted to make sure she was careful because she may explore a run for president in 2016. >> including going back to where he served his country some 45 years ago or so, any impressions? >> it was a striking trip. this is a man -- the place where we got to go on a boat with secretary kerry -- literally on the river that shaped the course of his life.

not only did he win his silver star, his bronze star, and his purple hearts in the area we were -- it was his first time back as a civilian -- remember, he was the man who fought for prisoner of war rights and normalization -- >> with john mccain. >> and bob kerrey. it was his service and people impugning his service that sunk his 2004 campaign. seeing the emotion in his eyes while he was on the boat even though he is not known for public a motion that public displays of emotion, it was amazing. >> even more than barack obama and the washington redskins, it was a lousy year for congress. >> you hear a lot of comparisons to be do-nothing congress. this congress has done less than that one. by all accounts it was a bad year. the one thing they did get done was a small budget deal.

even that has come under a lot of criticism that it does not do anything to curb the long-term. >> it was a small deal. that really was an outgrowth of the backlash to the government shutdown, wasn't it? >> it was a blow back to the government shutdown. the first government shutdown in 17 years cost the economy about $16 billion. i think that house speaker john boehner saw that this was a up with relations disaster and that the end of the day, the republicans that "the shutdown over obamacare, when you look at how they came out of the battle -- we got the shutdown but did not get the confessions they were seeking -- concessions they were seeking during the battle. i think all parties really is it was a political disaster. >> as the year ends in the house, how much control does house speaker boehner have? >> i think his hand is

strengthened. i think that john boehner knew from the beginning that this battle over obamacare was a losing proposition and he let the tea party in a way run itself into the ground and let them see this was the case. not only did they realize that, but a lot of these outside groups are starting to mobilize now. you saw the consensus around basically firing the head of the republican senate committee, which was a conservative had in the house, because he was too cozy with these outside groups that were pushing on this point. >> a stronger john boehner. let's turn the other side. harry reid employed the nuclear option. buildings are still standing. >> you're not seeing a shift -- it is kind of like an infection spreading from the house from the bitterness and the rank or they use on the house to the senate. republicans are very angry about this.

you usually don't make rule changes by simple majority. from the democratic standpoint, there was an unprecedented blockage of nominations. it will add to a lot of the bitterness that we see in both chambers. >> however bitter against, it will hard to be worse than it was in 2013. thank you both very much. the years biggest themes. ♪

>> welcome back. we will get to margaret carlson in a moment. first, one of the biggest themes of 2013 -- money and politics. as we say, it is always there. this way it was in the republican party, too. i think that was the story to watch next year as well. we got a taste of what will happen next year when some the bigger as groups said they were ready to come out and get involved in republican primaries. they are ready to put their money where their mouth is.

>> will they deliver? they are talking about a michigan race and one or two others. will they take on incumbents? >> i think they have some key signs that they are involved in ready. they are healthy on mitch mcconnell in kentucky fight off a primary contender. >> mitch needs money badly, too, i know. >> it is mostly a symbolic gesture, i think. they are also helping mike simpson. >> speaking of money, hillary clinton, who was outspent when she was outraised by barack obama when she ran for president in 2008 i'm a she is trying to make sure that doesn't happen if you runs again. >> she may not be ready for 2016, but a whole book people are ready for hillary. that is the name of the super pac that emerged in the beginning of this year. it was not taken terribly seriously at first but within the first couple of months of the year it established itself as the go to proxy campaign for

her whether she is ready or not. what they're doing is not so much raising big money at this point, although they have raised more than $1 million so far, but they are raising resources. they're signing up people, data, voter information, and most importantly supporters who are willing to get out there and work on her behalf. >> the irs scandal which really ended up as a non-scandal, but it may have opened up new rules to end the scam of so-called nonprofits on both sides of the aisle pretending to be nonpolitical. >> i think that is a bit of an optimistic you. that is a ways off. the irs has said they'd like to have some new rules, redefining every expanding the definition of "political activity" for nonprofit. that is years off. rule writing, as you know, is not a simple overnight process. we will hear about this quite a lot next year as they go through

what exactly the rules will involve. >> we know that money will always -- in politics. let us go through 2013 and look at the best and worst. barack obama clearly had an awful year. who had the best year? >> governor chris christie. it might be obvious, but -- he won red votes, blue votes, and in a blue state. >> chris christie had a great year in 2013. the other guy who had a great year was paul ryan. he was able to broker a bipartisan budget deal but also retain some measure of credibility with the right and continues to have a little bit of mystery about what he's going to do for 2016. >> we lost one of the giants for

this age in 2013 when nelson mandela died a few weeks ago. who else, lanhee, that passed away this year has really left one of those marks for the ages? >> it has to be margaret thatcher. incredibly influential, not just in the u.k. but obviously in the united states. her influence was felt through administration, through many public and politicians. her dialogue and being will be a part of politics for decades to come. >> i would say that about ed koch, the mayor of new york. how am i doing? he changed the way that politics are played and he kept going into his 80s. >> what was the best phrase about 2013? >> i'm all about the pope. when he said, who are we to judge?

when he said that the catholic church has to be more about what is wrong with people and being more kind, i think he was talking about gay people. >> henry chow said let's just hope this does not turn out to be a third world experience. he was right. it turned out to be a third world experience for many americans and obamacare has been a disaster. as what is been the funniest thing? >> the continuing consternation over "duck dynasty." i think it says volumes where we are as a society. >> if by funny you mean ridiculous, i think toronto mayor rob ford who ended the year flapping his arms.

>> happy new year to everyone. ♪

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>> what is it like to have customers come and tell you that your product really wasn't that great? >> there was a day when we woke up and realized we could not go any further and unless we fixed the pizza. from a quality and taste standpoint, we had a negative brand. >> we had to go out there and tell them that our old pizza sucked. >> the pizza turnaround and reinventing the core recipe was the first thing we worked and one of the last things we launched. >> it is a new domino's. it is a new era.